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What is tape reading ??

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Portland, United States
Trading Experience: None
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Favorite Futures: ES, CL, GC, Currencies, Bonds
Posts: 169 since Jun 2015
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Tape Reading Definitions:
1. Price Action = Reading price one bar at a time, swing highs and lows, observing market structure.

2. Order Flow = Watching the T&S (Time and Sales) and/or DOM (Depth of Market).

How do we read?
By telling ourselves a subjective story of what we're seeing, feeling, reading, observing, understanding.

Example of how I "read" the tape and tell myself a story:
Who's losing? Who's winning? Who's fearful? Who had or has good trade location? Who had or has bad trade location? Who's confident? Who's disappointed? Who's assuming more risk by trading long or short right now? Where can I risk a little to make a lot? I see an opportunity, does it fit my money management plan? Who's probably going to take profits soon? Who's probably not going to take profits soon? Where are the losers trading?

How I use the story:
Generally, I just look to do the opposite of what I think the losers are doing (that may take you some time to figure out for yourself), and I only trade if the opportunity fits within my money and trade management plans and strategies which I engineered to fit my knowledge of self and the markets.

Start making observations yourself. Learn how and why certain kinds of patterns repeat. Lastly, figure out how you can trade them by engineering solid money and trade management plans and strategies. Last but not least, you need to put in the work. It may take several months, or several years of studying 8-16 hours a day. You should also keep in mind that most people never never make it in this business. From what I've heard, probably less then 1 in 2,000 traders are consistently profitable for more then a year.

Last edited by Portland; September 27th, 2016 at 10:07 PM.
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